It’s probably safe to say that most of us have been there before. That uncertain pause when the rental car clerk asks “Would you like to buy our accident waiver insurance?”

You don’t want to be liable to the rental car company if you damage their car, but paying for all of that coverage can be very expensive and you already have auto insurance. I priced out a couple of one-day rentals and saw that adding all of the possible insurance to my (already expensive) rental would add another $10 to $30 or more to the cost of renting the car.

But should you pay for it at all? Here is what they will try to sell you:Loss Damage Waiver. This is essentially collision coverage for your rental car. Like your auto policy, it will pay for damage to the rental car. This will also cover the rental car company’s lost income from having the car out of service.
Personal Accident Insurance. This coverage is personal injury protection that will provide for medical expenses and, depending on the company or state laws, may also provide some death benefits, too.

Personal Effects Protection. This coverage will insure any personal belongings that are stolen from the car or damaged in an accident.

Additional Liability Insurance. This is just what it sounds like: liability insurance. Like the personal liability insurance on your home or auto policy, this will provide liability protection against claims related to injury, death or damage related to your rental car.

Roadside Assistance. This will provide roadside assistance in case your rented car breaks down and you need help, or if you lock your keys in the car. If you are a member of the American Automobile Association (AAA), you already have this protection; your coverage travels with you, not your car. Other insurance carriers may also cover your rented car.

My advice: Relax. For most people who already have their own automobile insurance (and that’s a safe bet for the readers of this publication), it’s likely that you are already covered for many of these items under your existing policy, at least up to your existing policy limits. You may be responsible for deductibles or other charges like loss of use, but your existing policy should provide you some protection. The key here is your policy limits: if you drive and insure an old Ford but rent a premium car, your policy might not pay for much.

Also, your homeowner’s or renter’s insurance probably covers lost or damaged personal items, even in the rental car. Finally, your credit card may even cover some of your losses, although this varies from issuer to issuer.

So if there’s any question about whether or not you need to spring for the rental car insurance coverage, here are two easy things you can do:

Call your insurance carrier. Ask them what coverage is available to you under your existing policy when you rent a car. Ask them what you might be on the hook for in the event of a total loss of your rental car. Ask whether you will still be covered if you decline the insurance offered by the rental car company.

Call your credit card company. You have to actually use the card to book and pay for the car rental, but once you do, see what coverage they provide, and what the limitations are. Many cards today provide a Collision Damage Waiver or Car Rental Loss and Damage Insurance, but these are limited to theft or damage to the car. And there may be limitations on the kinds of cars that are covered as well.

When does it make sense to buy the rental car insurance? If you don’t own a car, or have only minimal coverage, you should seriously consider buying the insurance. Also, your personal policies may not cover you out of the country or if you drive the rental car across an international border, so check with your insurer before you rent a car outside the U.S.

So check with your credit card issuer and with your insurer. Thirty minutes on the phone can lead to very real savings when you travel.

This column is prepared by Rick Brooks, CFA®, CFP®. Rick is director/chief investment officer with Blankinship & Foster, LLC, a wealth advisory firm specializing in comprehensive financial planning and investment management. Brooks can be reached at (858) 755-5166, or by email at brooks@bfadvisors.com. Brooks and his family live in Mission Hills.

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